Local businesses continue on the road to recovery

18% of local businesses have reported a decline in overseas sales, 9% down from the previous quarter.

The Herefordshire & Worcestershire Chamber of Commerce has released the results of the latest Quarterly Economic Survey Report, in partnership with Bishop Fleming, outlining business performance between Monday 23 August to Monday 13 September (Q3).

The report is the most up-to date snapshot of local business performance since the ease of coronavirus restrictions and shows just how companies in Herefordshire and Worcestershire are managing the recovery effort.

The UK Market continues to grow and recover, sales have increased from the previous quarter, in quarter 3 2021 49% of businesses experienced increased sales, compared to 48% in quarter 2 2021. This increase in sales is due to amplified activity within the market which has seen businesses being able to trade independently without any government restrictions, which is leading the UK economic recovery.

32% of businesses advised sales had remained constant and 12% reported a decline in sales. Businesses are currently facing challenges around labour shortages and supply chains, which has impacted industries such as manufacturing, transports, and logistics.

The overseas market has seen a decline in sales when compared to the previous quarter. In quarter 3 2021, 13% of firms experienced an increase this quarter compared to 37% in quarter 2 2021. The decline in overseas sales is due to a range of factors such as increased shipping costs, which has seen prices increase by 1000% in some cases as firms are struggling to keep up with prices which is then leading to issues with imports and exports.

Furthermore, the challenges around labour shortages from Eastern European countries has seen industries such as agriculture, hospitality and manufacturing witness a huge reduction in staff retention, which has caused significant gaps within these sectors and issues when recruiting candidates within a testing labour market.

33% of businesses have experienced a decrease in cash flow this quarter, compared to 39% from the previous quarter. The decline in cashflow is due to several factors such as withdrawal of government economic support packages inducing the Job Retention Scheme, which supported over 9.6 million people over the last 18 months as well as loan repayments becoming due.

Employers under the scheme were able to furlough workers and save costs, whilst being closed because of government restrictions. However, 49% of firms have advised cash flow has remained constant, due to demand for services which has helped firms recover from the last 6 months. Although 18% of firms have advised they have seen a decline in cash flow from the previous quarter, factors include local outbreaks of Covid-19 cases which has affected operations, restrictions in international travel and reduced government support.

Sharon Smith, Chief Executive of the Herefordshire & Worcestershire Chamber of Commerce, said: “There are a number of positives to take from businesses performance during Q3, as the successful vaccine programme continued to be rolled out, business confidence returned. However, there are still a number of issues that need addressing. The staff shortages and supply chain issues facing businesses is an unwanted hurdle that may affect the recovery process down the line.

“The Chamber will continue to support businesses with whatever issues they may have and we will continue to lobby for further government support for local businesses.”

To download the free digital report, please visit www.hwchamber.co.uk/support/policy/quarterly-economic-survey.